Excerpt from Insurance Business and written by Sam Boyer
For nonprofits, the volunteer workforce is often critical to the safe and successful running of events. But with volunteers come risks.
While bad apples can be found everywhere, in any organization, the reputational repercussions for nonprofits from illegal or improper activities can be dire. That’s why insurers for nonprofits encourage the use of background checks on all volunteers.
Peter Persuitti, managing director of the nonprofit practice at Arthur J. Gallagher, said nonprofits were held to incredibly high standards – and not conducting background checks could open them up to serious reputational harm.
“One of the things that has been very clear in our understanding of risk is that, especially with employees and volunteers who are dealing with children, or dealing with vulnerable situations, or transporting people … that you really ought to do background checks,” he said.
And while the market is mature enough to know that 94% of crimes are committed by people who have passed background checks, allowing someone through the cracks could spell particular disaster for a nonprofit, Persuitti said.
“Reputational damage is [risk] number one,” he pointed out. “Nonprofits are held to a much higher standard than even the President of the United States, if you think about it. So there’s that potential… the stakes are extremely high for the institution.
“And there’s also, of course, other things that can happen as a result of an organization’s negligence. Coverage could be cancelled on a go-forward basis. So now there would be the chance that the organization doesn’t have the exposure or the risk covered or they have to go find it somewhere else. So there’s a myriad of things, but I think reputational damage and the harm to the victim – those things are just so huge.”
When it comes to background checks, nonprofits should also ensure they’re using a properly accredited company to conduct the screening, he added. Failure to use a proper organization can lead to other problems, like in one instance Persuitti mentioned, where a huge data breach at a nonprofit is speculated to have come from a third-party screening company.